Nissan Slashes Annual Outlook Amid Deep Discounts

Nissan Motor Co. has revised its annual outlook downward after deep discounting in the United States, significantly impacting its first-quarter profit. The unexpected downturn in earnings has raised concerns about the automaker’s prospects, particularly in its crucial markets, the U.S. and China.

First-Quarter Performance and Revised Forecast:

For the April-June quarter, Nissan reported an operating profit of 995 million yen ($6.5 million), a stark contrast to the 128.6 billion yen earned in the same period last year.

This result fell drastically short of the 164.4 billion yen average forecasted by analysts, as compiled by LSEG. In response, Nissan has cut its operating profit forecast for the financial year by 17%, lowering it to 500 billion yen.

Challenges in Key Markets:

Nissan’s performance in the U.S. and China, which account for half of its global sales, has been underwhelming. In the first quarter, the automaker marketed more than 100,000 vehicles in these two markets.

However, deep discounts and increased marketing expenses in the U.S., aimed at countering intense competition and shifting vehicles off lots, have severely impacted profitability.

In China, Nissan faces additional challenges from a price war with local manufacturers. To optimize operations, the company recently halted production at one of its eight Chinese factories, a joint venture with Dongfeng Motor.

CEO’s Response and Strategic Focus:

During an earnings briefing, Chief Executive Makoto Uchida acknowledged the tough first quarter, stating, “The first quarter was very tough for Nissan. However, we’ll recover our performance by taking clear measures to address the challenges and launching new models.”

Nissan plans to focus on the quality of sales and optimize inventory buildup in the U.S. The company aims to bolster sales in the second half of the financial year by introducing new and refreshed models, such as the Armada and Murano SUVs.

Impact on Stock and Market Reactions:

Following the disappointing earnings announcement, Nissan’s stock plummeted, experiencing its steepest one-day decline since February.

The share price fell as much as 11% before closing down 7% at 485 yen. This significant drop reflects investor concerns about its ability to navigate challenges in its largest markets.